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Other People’s Money

A couple of weeks ago I saw what purported to be a real time calculation of our national debt. I wanted to write the total down, but the numbers were going up so fast it was literally impossible. Suffice it say the total debt was just this side of 17 trillion dollars. Some of you might say it’s old news, but for me the reality of what I was seeing really slammed home and I haven’t been able to get those blurred numbers out of my mind.

A few days later, I heard a Senator explaining angrily that she wasn’t going to cut her budget any more and despite what we hear on Fox News, Congress does not have a spending problem. A short while later Ms. Pelosi opined that the deficit isn’t the result of out of control spending, instead, it springs from the fact that the wealthy aren’t paying their fair share of taxes. Gee, maybe that’s why Senate Majority Leader Harry Reid doesn’t need to pass a budget. He already knows what he wants to spend and like Ms. Pelosi said, spending isn’t the problem.

Could Pelosi and Reid actually be wrong? A few seconds of research disclosed a Washington Times article reporting that the wealthy pay 70% of all taxes! Don’t the statistics make their own statement about who pays their fair share? For example, in 2009, the top 10% of earners paid 71% of all taxes even though they earned 43% of the income. Is that a fair share? At the same time the bottom 50% of earners paid only 2% of income taxes while earning 13% of the income. Nearly 50% of earners paid no taxes at all!

The facts make you wonder exactly how Ms. Pelosi and Mr. Reid define the term “fair share.” What exactly are the characteristics of a “fair share?” The meaning of the adjective fair is pretty straight forward. It basically means to be treated equally. Proportionately, on the other hand, means to keep the same relationship of size or amount to something else. A fair share of taxes would require that the wealthy be treated equally and that’s not what’s happening. Maybe Ms. Pelosi, et al, meant to use the term “proportionate share” of taxes, because I don’t think “fair share” describes what’s really happening. “Fair share” is being to look like one of those artfull misuse of words. Kind of reminds you if “undocumented immigrant” doesn’t it.

Think about it. The wealthy don’t use the public streets more than anyone else. They pay for the utilities they consume. They pay for their food, they pay for the chattels they purchase. Every time the wealthy purchase something tangible they pay sales tax. If they own real estate they pay property taxes. When the wealthy pay their employees they pay employer withholding etc. etc. In fact as you drill down into the issue it becomes obvious that a large poor family consumes more far more entitlements than their wealthy brethren.

Maybe we should do the research before we string these people up. The wealthy clearly pay a disproportionate share of income taxes, and indeed if they live in the wrong state (e.g. California) they only get to keep about 36 cents out of every dollar they make. I suspect that if you were told you could only keep 36 cents out of every dollar you might feel like you weren’t being treated fairly. But then what do I know. You can always find a wealthy guy who says he wants to pay more in taxes. Then it occurs to you that they could pay more anytime they want. The IRS won’t tear up their check. What’s going on?

We should also remember that virtually all of the charitable donations to charities in this country are the result of some wealthy person’s desire to help. Do the research. Warren Buffett might have paid taxes at a lower rate than his secretary (long term capital gains vs ordinary income) but at the same time he gave $3.1 billion away in charity. Makes you wonder why he didn’t just pay his secretary’s income instead of giving away $3.1 billion. For that matter, why didn’t he give his $3.1 billion to the IRS? Could it be Mr. Buffett felt like he could spend his money more wisely that the federal government?

According to President Obama it’s “patriotic” for the wealthy to want to pay more in taxes. What does that really mean? Because it sounds like the President is saying that it’s unpatriotic for a wealthy person to want to pay a fair share instead of a proportionate share. There I go with the tricky words again. Sorry.

Let’s back out of the weeds for a moment and recap what we’ve got. We have a national deficit approaching 17 trillion dollars. We have a Senate which refuses to pass a budget or even consider one. We have a President who thinks it’s unpatriotic not to want to pay more taxes. We have powerful politicians telling us with straight faces that there is nothing wrong with the federal government’s addiction to spending and that the deficit is all the fault of the unpatriotic wealthy who won’t pay a larger share of the income taxes.

How about this? What if we just took everything the wealthy earn? I mean every nickel – 100% taxation. Gee, by the President’s way of thinking that would be super patriotic wouldn’t it? But would it cover the deficit? No. Not even close. Even in the face of the mathematical realities the prevailing view in Washington is that spending doesn’t have to be cut! Unbelievable! How do these people make it through the day unassisted?

If the directors of a publically traded corporation managed their finances like our government does we would see shareholder derivative suits for malfeasance popping out of the woodwork left and right.

The more subtle part of all of this and possibly in the long run the most destructive, is the class warfare which is being promoted by the powers that be. It seems to me that “wealthy” used to be a good thing. Success and the achievement of wealth used to be the goal of every American. And, the fact that it could happen here was the key to America’s achievement and desirability as a country. At least that’s the way I remember it. When we were growing up we didn’t aspire to be on welfare. We were trying our level best to get ahead.

Isn’t it obvious? We’ve forgotten where we came from! Now we have a whole generation of politicians who believe that their climb to power requires the exploitation of the human failing of envy. To hear them tell it, all of the wealthy got wealthy by cheating you. The wealthy won’t pay their fair share. The wealthy aren’t patriotic. It’s because of the wealthy that your entitlements have to be cut. You’ll never get ahead because the wealthy are holding you back. Your only hope is a large federal government which will hold you, and shelter you, and take care of you. You don’t have to work hard, the government will give you food stamps and welfare and free medical care. Your government will protect and nourish you. All you have to do is surrender your ambition. Forget trying to work for yourself, and give up your willingness to work hard. For heaven’s sake don’t rely on yourself when you can rely on Big Brother.

For me the take-away is simple. Contrary to what Samuel Clemens may have thought the members of Congress aren’t idiots. They watched the news and saw the anti-austerity protests in Greece, France, Spain, Wisconsin, and elsewhere. And they’ve figured out that people don’t like to get their entitlements cut, even when their government has flat run out of money. So the politicians who aren’t brain dead are refusing to touch that third rail. Instead, they are playing to our most base emotions – hence the class warfare and hatred of the wealthy. Let’s get more money from the rich guys so we don’t have to make any adjustments to the entitlements. They say this even when the math clearly tells them that even if we robbed everything the wealthy earn it wouldn’t be enough!

You might want to read William Baldwin’s article then ask yourself whether or not the private sector workers are outnumbered by the people who are dependent on the federal government. But be careful who you share your conclusions with, Mr. Romney expressed some thoughts on the subject and we can see what it did for him.